Policy

Making it easier to set up and grow a business

Issue

Many people feel that starting a business is not for them. They are either worried about finding funding and making money, or because they don’t think they have the skills or experience needed.

Also, research shows that existing small and medium-sized enterprises (SMEs) can be put off growing their business because of:

  • lack of access to finance
  • not being able to recruit people and lacking the right skills in new and existing staff
  • day-to-day cash flow

Actions

Making the UK an easier place to do business

We’re providing funding and programmes to make loans available to more small businesses, including:

  • a scheme with the Bank of England to enable banks and building societies to borrow from them at cheaper rates, so they can then lend to SMEs at lower interest rates
  • setting up an independent British business bank to bring together public and private sector funds, creating more effective finance markets for smaller businesses in the UK

We’re providing funding and programmes to encourage private sector investment in small businesses, including:

  • working with private sector investors to provide government and private sector money to invest in SMEs
  • investing in SMEs with government and private sector money through:
    • the Start-Up Loan scheme
    • the Business Finance Partnership
    • Business Angel Co-Investment Fund

We’re funding and managing initiatives to encourage young people and give them the skills to set up their own business, including:

  • recruiting young business owners to volunteer as enterprise champions who will go into schools and talk to young people about running their own business
  • working with schools and colleges to encourage the use of schemes, for example ‘Tenner’, which gives £10 to each student to start a business and ‘Enterprise Village’, to help schools to set up businesses

We’ve taken 360,000 small businesses out of business rates, by extending Small Business Rate Relief for 12 months from April 2014.

We’re providing support and advice to SMEs.

We’ve introduced an Employment Allowance in 2014 for all business and charities. This entitles them to a £2,000 reduction in their employer National Insurance contributions bill each year. It will support small businesses that want to grow with the costs of employment.

We’re also making it cheaper for businesses to employ young people, by abolishing employer National Insurance contributions for under 21 year olds on earnings up to £813 per week.

We’ve launched websites that provide information to SMEs on how to run and grow their business – Great Business, GrowthAccelerator and Manufacturing Advisory Service.

Background

The number of private sector businesses in the UK increased to 4.9 million at the start of 2013 – a record high. BankSearch report that there were 447,000 new business start-ups in Great Britain during 2013. This is 9% lower than 2012, but is still healthy and higher than in 2008 and 2009.

Businesses have told us that they need access to finance and less red tape to keep running.

We’ve developed our policies to support start-ups and SMEs to:

  • help them continue to grow and make a contribution to the economy
  • get access to finance and support unavailable before

We work with businesses, financial institutions and other government departments, to help UK businesses start up, grow and succeed. Our work covers:

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